Section 6-3-2-1.7 - Election for certain corporations; qualified distribution sales to a distributor for resale; sourcing of the sale(a) For purposes of this section:(1) "Distributor" means a person or entity located in this state that purchases tangible personal property from an eligible corporation for purposes of resale. For purposes of this section, a distributor is not a person or entity that has a relationship described in Section 267(b) of the Internal Revenue Code with the eligible corporation.(2) "Eligible corporation" means a corporation otherwise subject to tax under section 1(b) of this chapter. An eligible corporation shall not include a corporation described in section 2.8(2) of this chapter or a corporation subject to tax under IC 6-5.5.(3) "Qualifying distribution sale" means a sale of tangible personal property by an eligible corporation to a distributor that:(A) is a purchase for resale by the distributor as defined in IC 6-2.5-5-8; and(B) for which the sourcing of the sale of the property to an ultimate customer outside Indiana is agreed to by the department and the eligible corporation, or, in the absence of an agreement, sourced by the ratio of the population of Indiana compared to the population of all states in which the qualified distribution sales are sold to an ultimate customer. For purposes of this section, a qualifying distribution sale shall not include any sale for which the distributor does not issue an exemption certificate in the manner provided by the department under IC 6-2.5-8-8 or a purchase by the distributor for the distributor's own use other than for resale. A qualifying distribution sale shall not include any sale made by a pass through entity that would otherwise be attributable under this article to the eligible corporation.
(4) "Ultimate customer" means a purchaser of tangible personal property who purchases the tangible personal property without an intent of future resale of property.(b) If an eligible corporation has greater than one billion dollars ($1,000,000,000) of tangible personal property sales that otherwise would be sourced to this state under section 2(e) of this chapter, and would have an apportionment percentage under section 2 of this chapter of greater than ten percent (10%) prior to application of this section the eligible corporation may elect to determine its tax as follows: STEP ONE: Determine the apportionment percentage under sections 2 and 2.2 of this chapter, treating qualifying distribution sales as if they were not receipts for purposes of the apportionment numerator, but treating the portion where the ultimate customer would be located in Indiana as part of the receipts numerator.
STEP TWO: Determine Indiana adjusted gross income in the manner otherwise provided in this article, applying the apportionment percentage in STEP ONE. For purposes of this STEP, any adjusted gross income arising from qualified distribution sales shall be treated as business income of the eligible corporation.
STEP THREE: Determine the tax due under this chapter on the amount computed in STEP TWO, reduced by any nonrefundable credits under IC 6-3-3 or IC 6-3.1, but not less than zero (0). For purposes of this article, any application of a credit under this STEP shall reduce the amount available for carryforward in the same manner as otherwise provided under IC 6-3-3 or IC 6-3.1.
STEP FOUR:
(A) If the eligible corporation's qualified distribution sales are not in excess of two billion dollars ($2,000,000,000), determine one-half of one percent (0.5%) of the qualified distribution sales.(B) If the eligible corporation's qualified distribution sales are in excess of two billion dollars ($2,000,000,000) but not in excess of three billion dollars ($3,000,000,000), determine three-eighths of one percent (0.375%) of the qualified distribution sales in excess of two billion dollars ($2,000,000,000) plus ten million dollars ($10,000,000).(C) If the eligible corporation's qualified distribution sales are in excess of three billion dollars ($3,000,000,000) but not in excess of four billion dollars ($4,000,000,000), determine one-fourth of one percent (0.25%) of the qualified distribution sales in excess of three billion dollars ($3,000,000,000) plus thirteen million seven hundred fifty thousand dollars ($13,750,000).(D) If the eligible corporation's qualified distribution sales are in excess of four billion dollars ($4,000,000,000), determine one-eighth of one percent (0.125%) of the qualified distribution sales in excess of four billion dollars ($4,000,000,000) plus sixteen million two hundred fifty thousand dollars ($16,250,000). STEP FIVE: Add the amounts determined under STEP THREE and STEP FOUR.
(c) Notwithstanding any other provision of this section, for an eligible corporation that makes an election:(1) if the tax for a taxable year covered by the election as computed under subsection (b) is less than twenty-six million dollars ($26,000,000), the tax shall be twenty-six million dollars ($26,000,000); and(2) if the tax for the taxable year covered by an election as computed under subsection (b) is greater than the amount specified in clauses (A) through (C), the amount of tax shall be the following amounts:(A) For a taxable year ending after December 31, 2018, and before January 1, 2025, forty million dollars ($40,000,000).(B) For a taxable year ending after December 31, 2024, and before January 1, 2026, forty-two million dollars ($42,000,000).(C) For each taxable year ending after December 31, 2025, forty-two million dollars ($42,000,000) plus one million dollars ($1,000,000) for each taxable year ending after December 31, 2025. For purposes of this subsection, the tax for a taxable year under this section shall be determined after application of any credit allowable under IC 6-3-3 and IC 6-3.1.
(d) If an eligible corporation makes an election under this section, the following apply: (1) The eligible corporation shall be subject to the election for the taxable year of the election and each taxable year thereafter until the first taxable year ending ten (10) years after the first year in which an election is made under this section, even if the corporation would not be an eligible corporation for a taxable year after the taxable year in which the election is made, and shall be binding on any successor corporation or group of corporations to the eligible corporation.(2) After the period of the initial election under subdivision (1), the department may permit a taxpayer to make an election under this section for each subsequent taxable year after the election expires under subdivision (1). However:(A) an election under this subdivision is only permitted for one (1) taxable year; and(B) if an eligible corporation does make an election for a taxable year, the eligible corporation may only make a new election if the new election is subject to the terms of subdivision (1).(e) If two (2) or more eligible corporations are part of a consolidated return or combined return, the computation under STEP FOUR of subsection (b) shall be determined separately for each corporation.(f) For purposes of computing net operating losses for the taxable year under section 2.6 of this chapter and the deduction allowable against adjusted gross income under section 2.6 of this chapter, the loss for the taxable year or deduction allowable shall be computed pursuant to STEP TWO of subsection (b).(g) An election under this section shall be in the form and manner prescribed by the department. The election must be completed and filed with the department on or before the date of filing of the original return for a taxable year to be effective beginning with that taxable year. In addition, if an eligible corporation files a consolidated return or combined return for the first taxable year of the election, or for any year subsequent to the first taxable year of the election, the eligible corporation and the department shall enter into an agreement regarding issues specific to consolidated or combined returns. In the absence of such an agreement, any such issues shall be treated in a manner prescribed by the department and published in the Indiana Register. If the original return for a taxable year is filed after the due date for the original return, including any extensions, an election will not be allowed for that taxable year or any subsequent year to which the election otherwise would apply. However, the eligible corporation may file an election for subsequent taxable years, provided the eligible corporation otherwise meets the requirements of this section.Added by P.L. 137-2022,SEC. 34, eff. 7/1/2022.